ObamaCare Already Hurting Workers

The unintended consequences of leftist policies.

The Left is expert at selling its statist, government-knows-best agenda as being in the service of the "greater good," improving the overall quality of life for individual citizens. These policies, however, almost always cause unintended consequences that leave the targeted individuals -- and scores of ancillary parties -- at the mercy of myopic government meddling. The ever-expanding list of unintended consequences produced by the disastrous Obamacare law provide a case in point.

The latest example concerns Darden Restaurants, an Orlando-based company that operates such franchises as Olive Gardens, Red Lobsters, and LongHorn Steakhouses. The company is reacting to the mandates imposed by the Affordable Healthcare Act, aka ObamaCare. According to one of the mandates in the the bill, employers do not have to provide health-insurance coverage to part-time workers, as long as they work less than 30 hours a week. Another says that a company with 50 or more employees must provide health insurance for their employees, or face fines of up to $3000 per worker for failing to do so.

Darden Restaurants is "experimenting" with a way to get around both of those mandates. In "a select number" of restaurants in four different and as yet undisclosed markets, Darden is putting almost their entire roster of employees at each location on part-time hours. In an emailed statement to the Orlando Sentinel, the company contends that staffing changes are "just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time."  Darden is attempting to answer one of those questions by limiting every employee to 28 hours of work per week. Former Olive Garden busboy Keaton Hasty noted the level of seriousness behind the initiative. "It was 29 1/2 (hours), and they'd kick you out," said Hasty, who now works at a pharmacy. "They'd always print off a little slip every day and say who was getting close."

Thus, Darden has met the first of the two aforementioned mandates head-on. The other part of this equation concerns companies that employ 50 or more workers, who must also provide those employees with health insurance, or face a significant fine for failing to do so. That particular part of the equation is hardly unintended, as progressives have made no secret of the fact that "incentivizing" businesses to pay the fine and drive their workers to government exchanges, is part of the long-term goal of getting every American on a government-run health plan.

Yet again, dynamic behavior will inevitably produce the obvious unintended consequences of this arrangement: companies with a roster of employees close to the threshold number of 50 will have almost no reason whatsoever to hire any additional workers, if those additional workers put them under the statist boot they can otherwise avoid. And a company with slightly more than 50 employees may be perversely inspired to find a way to reduce their number of workers, also in order to get below the threshold. If the volume of work necessitates additional help? Companies will likely outsource the work even if it is more inefficient than hiring new employees directly.

In effect, Darden has solved the problems imposed by both mandates. Since part-time workers are not required to be covered, Darden can have as many employees as it wants to hire, and as long as they work less than 30 hours per week, they will not be liable for healthcare coverage, or the fine imposed for failing to provide it. Unsurprisingly, Darden Restaurants are not alone. Analysts contend other companies, including the White Castle hamburger chain, are looking to do the same thing. "I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week," said Matthew Snook, partner with human-resources consulting company Mercer.

Yet that is only part of the equation. Since Darden is large enough and profitable enough, progressive critics contend that it is "prioritizing profits over employees’ satisfaction and well-being" and that additional laws could be added to ObamaCare to prevent such "benefit-dodging." This is due to the reality that ObamaCare "only modestly increases health care spending for large firms," an increase progressives apparently feel it is the "duty" of large companies to absorb. They further contend that imposing ObamaCare on small businesses reduces their healthcare costs based on three factors: the less than 50 employee exemption, a tax credit to help with the costs of healthcare premiums for companies that employ 25 workers or less (with an average salary of $50,000 or less), and a more competitive market produced by the state-run healthcare exchanges mandated by the plan.

The first factor has already been debunked. As for the second, tax credits only matter if a small company wants to provide their employees with insurance--assuming they have the wherewithal to do it in the first place. Many small companies operate on low profit margins, and any extra burden imposed on them by government is a disincentive to hire. The idea that a tax credit--as opposed to maintaining a profit margin--will incentivize not only additional employment, but the acquisition of an employee healthcare plan as well, is the stuff of progressive dreams.

Yet it is the idea of state-run exchanges where the whole scheme falls apart. Part of the Supreme Court ruling that deemed the healthcare law constitutional also allowed the states to resist setting up those exchanges. Thus, in yet another classic example of unintended consequences, several states have already decided to do just that. As a result, the burden to do so would fall on the federal government. Yet that burden has neither been included in the cost projections of ObamaCare, which have already been revised upwards to $1.7 trillion over the next decade, nor has it been part of any additional budget appropriations enacted by Congress. Furthermore, the taxes and/or penalties imposed on companies with 50 or more employees only applies if at least one employee qualifies for subsidies that would be available using these exchanges. Thus it is very possible that individual states could invalidate the entire concept of an employer mandate.

No doubt for many progressives and their top-down centralized government ambitions, the concept of states rights' itself is one of those "annoying" unintended consequences.

In the meantime, 25 percent of Darden's workforce is full-time. And as ironical as it gets, every one of their approximately 185,000 employees is offered health insurance. Many of those employees are offered a limited-benefit plan, which may or may not be sufficient to cover all of their needs. But it is certainly better than no plan at all. Unfortunately, limited-benefit plans are yet another casualty of ObamaCare, which is phasing out such coverage, and will eventually ban annual limits on most health plans. Thus, Darden may be permanently phasing out full-time employment in response.

As far as progressives are concerned, all of the above can be filed under the heading of "unintended consequences," with the implication being that they did their best, but no one could foresee what would actually occur. Such preposterous nonsense is no longer acceptable. Progressives and their ideology will be responsible for the millions of Americans who will be relegated to a future of part-time employment--if they can find employment at all. Moreover, Americans have been far too tolerant regarding the failure of progressives and their "good intentions." In this case, they are little more than perverse disincentives for job creation, for which progressives offer no solutions other than ginning up guilt--or introducing even more government mandates into the equation: the Obama administration has claimed they can unilaterally rewrite the healthcare law to close the exchange loophole.

Given this administration's utter lack of respect for the constitutionally-mandated separation of powers, it is more than likely they will pursue this strategy. But they should expect two results in return. First, any changes in the law will undoubtedly be challenged, likely ending up in the Supreme Court yet again. Second, no matter what the outcome of that challenge will be, Americans will react dynamically to it--all unintended consequences included.

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